Supreme Court blocks Trump’s attempt to fire Fed governor Lisa Cook over unproven mortgage fraud allegations

The United States Supreme Court refused to let US President Donald Trump fire Federal Reserve Governor Lisa Cook, rejecting Trump’s attempt to remove the Biden-appointed Fed governor amid allegations of mortgage fraud.

The high court handed down a 5-4 decision on Monday, blocking Trump’s bid to become the first president to remove a Fed official since Congress created the central bank in 1913.

Chief Justice John Roberts and conservative Brett Kavanaugh, who was appointed during Trump’s first term, joined the court’s three liberal justices. Justices Clarence Thomas, Samuel Alito, Neil Gorsuch and Amy Coney Barrett dissented.

In August, Trump cited unproven allegations of mortgage fraud in an attempt to oust Cook, who said the claims were a pretext to influence monetary policy. He also repeatedly attacked the central bank and launched an investigation into then-Governor Jerome Powell, moves widely seen as political pressure as the Fed resisted cutting interest rates as quickly as Trump wanted.

Roberts said that Trump did not “afford Cook the procedural protections to which she was entitled by statute. Without such protections, she could not properly dispute the charges the president laid against her.”

Roberts also said governors at the central bank “do not serve at the president’s pleasure – they instead serve staggered 14-year terms, and may be removed only ‘for cause’,” Roberts added.

“We hold that such protection from removal is contrary to the separation of powers enshrined in the Constitution,” the chief justice wrote for the court.

Cook praised the high court’s decision. Cook claimed it helps keep the central bank independent and free from political interference.

“This was never about mortgage documents signed years before I became a Federal Reserve governor. It was an attempt to remove me on a manufactured pretext because I refused to bow to political pressure and continued to set interest rates based only on what would best serve the American people,” Cook said.

The justices denied a request from Trump’s Department of Justice to lift a judge’s order barring him from immediately firing Cook while her legal challenge to the termination continues. Cook denied Trump’s allegations.

Cook’s term in the job was due to run until 2038. She was appointed by former Democratic President Joe Biden in 2022.

The case against Cook stems from allegations she claimed two properties, in Michigan and Georgia, as “primary residences” in June and July 2021, before she joined the Fed board. Such claims can lead to a lower mortgage rate and smaller down payment than if one of them was declared as a rental property or second home.

Those applications, Solicitor General D John Sauer said in January, are evidence of “gross negligence at best” and give Trump reason to fire her. In any event, he argued, courts shouldn’t be reviewing his decision, and Cook has no right to a hearing.

Cook has denied any wrongdoing and has not been charged with a crime.

When the justices in October agreed to hear the Cook case, they left her in the post for the time being. The Supreme Court heard arguments in the case in January, with Cook and Powell in attendance.

In another ruling on Monday, the Supreme Court backed Trump’s firing of Rebecca Slaughter, a Democratic Federal Trade Commission member, expanding his powers over the government and overturning its 1935 precedent that recognised Congress’s authority to protect leaders of certain regulatory agencies from presidential removal at will.

Monday’s Cook ruling follows the February 20 decision by the justices in another case with major economic ramifications, striking down most of Trump’s sweeping global tariffs, a ruling that elicited a vitriolic condemnation of the court from the president.